Amazon to pay €250m (£221.5m) in back taxes to Luxembourg

Brussels has ordered Amazon to pay €250m (£221.5m) in back taxes to Luxembourg in its latest crackdown on US tech giants.

The European Commission had already said a deal between Amazon and Luxembourg over how much tax it pays amounted to state aid in preliminary ruling in 2015.

Now the competition chief Margrethe Vestager has ordered the tech company to repay millions.

It’s the latest ruling from Brussels when it comes to the tax arrangements of tech companies. Last year it ordered Ireland to recoup a record €13bn from Apple as a so-called sweetheart deal was deemed to amount to state aid.

Both Apple and Ireland have challenged the ruling, but a legal tussle between the two could result in further action by the commission with the cash yet to be collected more than a year later.

EU member states last month signalled their intention for coordinated action on the taxes paid by tech companies. Led by French finance minister Bruno Le Maire, the plans are supported by eight other states, including Germany and Spain. The proposals are to tax the firms on turnover rather than profit.

The latest action is likely to inflame tensions between Europe and the US. Business groups and politicians across the pond have warned that such actions are detrimental to economic growth.